By: Bastian Rubben
The break-down of the support at 1380 points by the S&P 500 caused sharp declines, as I estimated. Many automatic orders & robots waited for the index to slide under the support in order to trigger the selling orders. However, the results season has started after the closing bell with surprising reports by Alcoa (AA) that lifted the markets after the trading hours, so we might see a continuation of that today. It is important to understand that during the results season, technical analysis of the US indices is less effective since the markets tend to be extreme volatile. This might affect also the USD, which influenced by the US stock markets.
The declines of the stocks support the American dollar against most of the major currencies, expect the Japanese Yen. The Aussie was one of the currencies that weakened against the USD, after it failed breaking through the 200 SMA and it is now facing the support of last week low at 1.024, as a successful break-down might take the pair down to 1.01.
Last Tuesday when the pair Euro traded around 1.28 against the AUD, I estimated that the pair would correct down and erase 50% of the recent rally. The pair moved as I figured and made the bullish reversal after reaching 50% Fibonacci levels. if the reversal continues, the pair might rise above 1.28 again and try to cross above the recent pick at 1.29.
